The Data
MBA Purchase Index = 265.7
Down 0.5% from last week, down 29.8% y/y
Average Mortgage Rates [30-year fixed, 80% loan-to-value (LTV)] = 4.76%
Down 3 basis points from 4.79% last week, with points increasing to 1.18 from 1.17The Takeaways:
Purchase applications increase slightly. The MBA Purchase Index improved slightly from last week, rising by 0.5%. Despite the moderate
improvement over the past two weeks, the trend emerging from the recent MBA data suggests to us that the recent momentum in buyer
activity has slowed as some of the pent-up demand from December and January may have begun to exhaust itself. While the four-week
moving average of the weekly purchase index is still up 5.6% since the end of February, it is now down 1.1% since the end of March. We
would also highlight that the four-week moving average is still down 29% y/y.Refinancing activity slows.
After rising 1.2% last week, the seasonally-adjusted refinance index plunged 11.2% in today’s report. Following this week’s decline, the index is down ~30% from the end of March. In our view, the lower level of activity is possibly an early indication that the refinance boom has begun to fizzle out, as banks have processed a record number of mortgage applications following the decline in mortgage rates last November. That said, refinancing activity remains elevated above historic norms driven by record low mortgage rates as well as the increased pool of borrowers eligible to refinance as a result of the Making Home Affordable Plan.
Thus, it is little surprise that refinancing activity continues to dominate the mortgage market, accounting for 71.9% of all applications.
Affordability remains near all-time highs. Dropping this week’s data into our framework yields a 131 reading versus 102 last year, surpassing previous highs set in 1993 and 2003.Raymond James & Associates
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